Climate Change and Development for AfricaAddis Abeba

17-19 October 2011

Climate Change Finance

African Development BankA.BEILEH

Ag. Director, Agric & Agro-Industry Department

OutlineOverview on Climate Finance

Making Climate Finance work in Africa

MDB’s Contribution to Climate Finance

AfDB and Climate Financing in Africa

Conclusions

AdaptationMitigation ‘Climate Proofed

Abatements’

Development

Low Carbon Dev

‘Climate Resilient

Dev‘Climate Compatible

Development’

Source: Catalyst, 2009

Climate Change interventions must be rooted in Development, aligned with mitigation & adaptation

Key Global Financing Instruments

Funds under UNFCCC/Kyoto Protocol

GEF the financial Mechanism allocated $ 3.675 billion for climate change since 1991

Non‐convention sources  managed by funding agencies

Climate investment Fund $ 6.3 billion ‐2009

Forest Carbon Facility $165 million

Carbon Facility $470 million

Congo Basin Forest Fund $200 million

EU‐Global Climate Change Alliance ($300 million)

Environmental Transformation Fund ( $1.2 billion)

International Climate Initiative –Germany ($170)

MDBs

Climate Finance Status

Current financing instruments are based on voluntary contributions from developed countries

So far, the level of disbursement is very limited as compared to the needs, the funds are difficult to access and track, and therefore have lower impact

Much climate financing is in the form of global funds, also called ‘vertical funds’

Climate financing debate should focus on issues like:

Level of funds required (measured in USD billion) 

Form of funding, in particular how much of this finance should be additional to ‘traditional’ ODA

Accessibility for African countries to respond to Climate Change  

Cost estimates

Adaptation costs in Africa are estimated between $13-19 billion a year through 2015;Mitigation costs are estimated at between $9 and $12 billion through 2015;Costs estimated to double by 2030;Economic costs of CC estimated to 1.5 -3% of GDP through 2030 (Higher than other regions);These costs are low in comparison with the economic benefits of adaptation and mitigation;

Role of MDBs in Climate Finance

MDBs are playing an important role in responding to climate change through: 

Investing in development interventions

Providing climate financing instruments

Supporting target programs

Contributing to the development of carbon markets

Only 12% of climate financing flow from MDBs reach Africa, as compared to Europe‐MENA (37%); Asia‐Pacific (26%) and Latin America (24%)

MDBs’ Response to Climate Change

The role of MDBs in responding to climate change is being extended to cover issues such as:

Increasing analytical, policy and capacity building;

renewable energy;

Providing innovative climate change financing instruments;

Leveraging private sector capital;

Contributing to the development of carbon markets;

Making Climate Finance Work in Africa

Making climate finance work will require:

Predictability;

Public and Private sources.

Balance between Adapation and Mitgation

Carbon Market Reform

However Challenges Remain:

Transparency and accountability in fund access and management;

Increasing the absoptive capacity of recipient countries;

Increasing volume of aid in the face of the global financial crisis

AfDB and Climate Change Financing

in Africa

Draft Climate Change Action PlanComponents of AfDB’s Climate Change ProgramComponents of AfDB’s Climate Change Program

Polic

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Com

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Low

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Enhanced Investment in Clean Energy & Energy Efficiency

Promoting Sustainable Transport

Promoting Sustainable Land and Forestry Management

Promoting Sustainable Land Use & Water Resource Management

Building Resilience of Key Infrastructure & Urban Systems

Climate Proofing of AfDB’s Projects Ada

ptat

ion

Ada

ptat

ion

Clim

ate

Clim

ate --

Res

ilient

R

esilie

nt

Dev

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entA

dapt

ive

Ada

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eC

apac

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apac

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Fina

ncin

g Fi

nanc

ing

Plat

form

Plat

form Mobilizing

Concessionary Resources

Catalyzing PrivateCapital

Maximizing Market

Mechanism

AfDBAfDB’’s Draft Action Plan on Climate Change s Draft Action Plan on Climate Change

Budget Allocation of Action Plan

US$ 6 billion on climate change related projects 2011-2016

US$ 6 billion on climate change related projects 2011-2016

Key sectors include Agriculture, Water, Renewable Energy and Energy Efficiency, Sustainable Transport

Support to Climate Resilience

The Bank supports:

Enhanced human and institutional capacity

Effective climate information systems

Resilient infrastructure 

Examples:

Lake Chad Basin Sustainable Development Program

Support Program to Preserve the Congo Basin Ecosystems

Support to African Regional Climate Centers

The Congo Basin Forest Fund (CBFF)

The CBFF awards grants for activities that slow and eventually reverse the rate of deforestation in the Congo Basin Forest

Hosted by AfDB and supported by the United Kingdom and Norway

100 million GBP initial commitment

Regional co‐generation Initiatives in Eastern and Southern Africa.

Lake Turkana Independent Wind Power project

Support  to Solar Energy Technologies (PV/CSP)

Major analytical pieces of work on finance platform.

Off‐setting of Carbon emissions for Major Corporate Events and travels of the Bank

Support to Mitigation

Examples of AfDB Mitigation Operations

Support to Mitigation

The Bank’s portfolio to support a low carbon economy and mitigation is focused on renewable energy, energy efficiency, sustainable  transport, forestry, clean energy,

The Bank’s regional renewable energy projects also support regional integration

INGA Dam in DRC

Bujagali Dam in Uganda

What the Bank is doing under the CIF

Pilot Program for Climate Resilience (PPCR):  Niger, Niger, Mozambique, and Zambia;Mozambique, and Zambia;

Sustainable Renewable Energy Program (SREP):Ethiopia, Kenya and Mali;Ethiopia, Kenya and Mali;

Forest Investment Program (FIP): Burkina Faso, Burkina Faso, Democratic Republic of Congo and GhanaDemocratic Republic of Congo and Ghana;

Clean Technology Fund (CTF):  Egypt, Morocco, Nigeria, South Africa and MENA program;

Africa Green Fund (AGF)

At COP 15, African leadership represented by H.E. Meles Zenawi, PM of Ethiopia requested that Africa’s share of the new climate finance be managed by the AfDB

In the recent AU Summit in Malabo, African Heads of State decided that the Bank should pursue the design of the Fund to be presented in Durban at COP 17;

Potential activities includeAdaptation

Mitigation

Technology development and transfer

Capacity enhancement

ConclusionAfrica has low access rate to global resources, and therefore requires substantial resources and effective financing instrument

Africa’s needs are enormous and resources can come both from Public and Private sources

The existing climate finance instruments have so far low impact, as they support small‐size and pilot projects, with more emphasis on capacity building

Effectiveness of climate finance in Africa depends on the availability of new and additional resources

As lead development partner for Africa, the AfDB has comparative advantages in dealing with climate finance in the continent. 

The Africa Green Fund is key to deliver climate finance in Africa

Thank You

For Further Detailswww.afdb.org